Legislation of the Supreme Council of the Application of General Policies of the Principle 44 of the IRI Constitution

Ministry of Economic Affairs and Finance (MEAF)

In view of the proposal of the Board of Divesting, and on the strength of Note 1 to Paragraph A of Article 40 of the Law Partially Amending the 4th Economic, Social and Cultural Development of Iran and the Application of General Policies of the Principle 44 of the IRI Constitution, the Supreme Council of the Application of General Policies of the Principle 44 of the Constitution in its meeting held on February 15, 2009 approved the Bylaw on the Manner of Divesting the Preferential Shares, subject of Subparagraph 8 of Paragraph A of Article 40 of the aforementioned Law, with the observance of Note 3 of Article 20 of this Law as detailed hereunder:

Bylaw on the Manner of Divesting the Preferential Shares

Article 1) Preferential and installment-based selling of maximum five percent (5%) of the shares of the divestible SOEs, in view of the recommendation of the IPO and the approval of the Board of Divesting to the managers, employees and pensioners of the same SOE and installment-based selling of maximum five percent (5%) of the same SOE to other experienced, specialized and efficient managers, in view of the regulations of this Bylaw shall be authorized.

Part 1) Preferential and installment-based selling to the managers, employees and pensioners of the same SOE

Article 2) In selling the shares of SOEs, the allocation of preferential shares is of priority and its selling to the managers, employees and pensioners of the same divestible SOE, depends on the submission of the written request by the applicants jointly.

Note) Divesting of shares to the managers and employees is of a higher priority and if following the divesting of shares to these individuals, there remain further divestible shares of the SOE, the aforementioned shares shall be allocated to the pensioners of the same SOE.

Article 3) Managers and employees, who at the time of divesting of the preferential shares of the SOE, work in the divestible SOE as an employee or on a mission (including both official or contract-based employees) and have at least one year of work experience, and the said SOE has paid their insurance premiums for this period, even interruptedly, shall be entitled to buy preferential shares.Divesting of the preferential shares shall be carried out in view of the contract, which shall be concluded by the IPO and the applicants.

Note 1) Divesting of shares to the managers and employees on a mission, whose insurance premiums or their retirement deductions are paid from their Original place of work before their mission, shall not be authorized.Moreover, the employees and managers of the aforementioned SOE, who are on a mission in other SOEs, who have at least one year of work experience and the said divestible SOE has paid their insurance premiums for this period, even interruptedly, shall be entitled to receive preferential shares.

Note 2) The qualified individuals, who work in the category of investee SOEs, with more than 50 percent (50%) of their capital owned by the divestible SOE, shall be entitled to buy the preferential shares of the divestible SOEs, upon their request.Manner of divesting the preferential shares related to the merged or acquired companies shall follow the recommendation of the IPO and the approval of the Board of Divesting.

Article 4) The amount of the preferential shares, which may be divested to each one of the qualified individuals subject of Article 3 of this Bylaw shall be maximum ten times of the average of the last six months of the amount of salary and premiums received continuously by the applicants based on their Salary Orders.

Article 5) Those pensioners of the divested shares, who had not previously received justice shares, in view of the Note 2 to Article 2 of this Bylaw may be entitled to receive preferential shares of the SOE up to the maximum 10 times of the average of the amount of the last six months of the salary and premium they have continuously received in view of their salary orders.

Note) Simultaneous use of the benefits of the justice shares and the preferential shares is not authorized and if the pensioners who are subject of this Article had previously used the benefits of the justice shares, and now intend to receive the preferential shares, shall return their justice shares in advance.

Article 6) The qualified individuals shall submit their request in view of the Article 2 of this Bylaw to the IPO within 30 days of the 1st Notice of the Share Supply or the announcement of the IPO to the divestible SOE.Otherwise, the IPO shall sell the concerned shares with the conditions of other shares of the SOE.

Article 7) Each one of the qualified individuals, who is a volunteer to buy the shares, is required to completely pay up the Price of Transaction in installment at maximum within 10 years, without taking into account the interest on the installment-based selling.Collection of installments in the first instance is done out of the interest allocable to the shareholders as the partial reimbursement of the purchasers’ debts subject of this Bylaw and if it does not suffice, the purchasers shall be required to pay the outstanding installments in person.

Note) In case the employment relation of the beneficiaries, subject of Article 3 of this Bylaw, with the related SOE is cut, the aforesaid SOEs shall be required to receive the commitment to pay the installments annually, including the complete address of the aforementioned individuals.

Part 2) Installment-based selling of shares to other experienced, specialized and efficient managers.

Article 8) Aimed at the promotion of management knowledge and development of skills in the divestible SOE, the members of the Board of Directors, Managing Director and other individuals with similar titles, having at least two years of management experience in the area of activities of the divestible SOE and other senior managers with the academic degrees and at least two years of management experience in engineering affairs (design, oversight, and inspection), production and execution (production management and or executive management) and management of exploitation (administrative, selling, commercial, support and financial) in the area of activities of the divestible SOEs and or five years of equivalent management experience in the SOEs and similar units or related industries (economic sector), (in view of the last ISIC classification), with the conditions to be recommended by the IPO and approved by the Board of Divesting, shall be entitled to the receiving of the shares subject of this Article.

Note) Managers subject of this Article shall be required to submit to the IPO the necessary documentations for the qualification of the conditions detailed in this Article.

Article 9) All the experienced, specialized and efficient managers, enjoying the qualifications detailed in Article 8 of this Bylaw, may submit to the IPO their written request for the installment-based purchase of shares of the divestible SOEs.In view of their written request and following the approval of the Board of Divesting, the IPO shall be authorized to sell to the aforementioned individuals at maximum five percent of the SOE shares.The amount of shares allocable to each one of the qualified individuals shall be at maximum twenty times of the average of the last six months of the amount of salary and premiums received continuously by the applicants based on their Salary Orders.

Article 10) The qualified managers, subject of this part, shall be required to submit their written request to the IPO within twenty (20) working days of the first notice of the supply of the SOE shares.They IPO shall be required to notify the results of its examinations to the applicants within twenty (20) days.

Note 1) In case the aforementioned managers fail to submit their request to the IPO within the duration stated in this Article, the IPO shall be authorized to sell the concerned shares with the conditions of other shares of the divestible SOE.

Note 2) If the aggregation of requests exceed the ceiling of the divestible shares, subject of this part, the shares allocable to each one of the applicants shall be decreased proportionately.

Article 11) The qualified applicants shall be required to pay in cash the amount of 20 percent of the transaction value and pay the rest during the repayment period of block installment detailed in the notice, without taking into account the interest on the installment-based selling.Collection of the installments annually is done out of the interest allocable to the shareholders as the partial reimbursement of the purchasers’ debts, subject of this Bylaw, and if it does not suffice, the purchasers shall be required to pay the outstanding installments in person.

Article 12) Different types of the valid guarantees receivable from the managers, subject of this part, include:

a)bank guarantees;and

b)insurance guarantees;

c)property mortgage amounting to 90 percent of the official expert-determined value;

d)different types of participation, which are guaranteed by the government or its banks;

e)shares of other public joint stock companies listed in the Stock Exchange, with the basis of seventy (70) percent of the day value;

f)promissory Notes;

g)finalized claims of the contracts by the executive organs and the related accountants;

h)a combination of the aforementioned items;

Note 1) Submission of the aforementioned guarantees, at minimum 50 percent of the installment-based portion of the transaction price shall be required.In any case, the transacted share shall remain in the IPO mortgage until the complete settlement of debts of the managers, subject of this Article.Moreover, in such cases, the commitment of the aforementioned individuals regarding the mortgaging of the Title Deeds of the transacted shares with the IPO shall be required.

Note 2) In order to guarantee the fulfillment of their commitments, the managers subject of this Article, in the framework of a binding contract, shall give to the IPO the official irrevocable power of attorney, delegating the authority of giving possession or transfer of the remained shares of the transaction up to the ceiling of their claims, in case(s) of failure to pay the installment on the part of the purchasers to any person and or under any conditions and in any price that the IPO deems expedient.The aforementioned Power of Attorney shall be drawn up and duly submitted to the IPO concurrent with the transfer of the shares.

Part 3) Other Cases

Article 13) Price of shares subject of this Bylaw, shall amount to the price calculated and applied by the IPO in view of the provisions of the Bylaw regarding the Pricing Methods of the SOEs and the manner of application of the aforesaid methods subject of subparagraphs 3 of Paragraph A of Article 40 of the Law Partially Amending the 4th Economic, Social and Cultural Development of Iran and the Application of General Policies of the Principle 44 of the IRI Constitution.

Article 14) The Stock Exchange shall be authorized to respectively releases, issue and deliver the share certificates purchased to the name of the purchaser, the annual installments of which are paid each year.Unsettled share certificates of the purchasers shall remain in the mortgage of the IPO until the end of the Duration of the Contract and the purchaser may not transfer the same to other before the settlement of the due debts.

Article 15) In case of failure to pay the installments after six months of the authorized time limit for the division of the financial profits in the Company for any reason, the IPO shall be authorized to release the mortgaged shares in proportion to the amount of debt and give the same to the beneficiary.The IPO may sell the remained shares to others, observing the related regulations.This issue shall be provisioned in the concluded agreements.

Article 16) The consideration for selling the shares, subject of this Bylaw, shall be calculated through a simple method and shall be applied by the IPO at the beginning of the period of shares allocation.The rate of aforementioned consideration shall be calculated in view of the tariff to be recommended by the IPO and approved by the Board of Divesting.

Article 17) If the shares divested in view of this Bylaw, receives an increase of capital, the increased capital shall be mortgaged by the IPO, pursuant to that of the original share.The equivalent in Rls. of the shareholders’ contributions or their claims of the Company and the proportionate profits shall be an exception to this provision and shall not be mortgaged.

Article 18) Individuals, who formerly and in the framework of the related laws have purchased preferential shares through the provided facilities, shall be exempted from the facilities subject of this Bylaw.

Article 19) Using the facilities subject of this Bylaw shall be possible for one time only.

Seyed Shamsoldin Hosseini,

Minister of the MEAF and Secretary of the Supreme Council of the Application of General Policies of the Principle 44 of the IRI Constitution